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EXHIBIT 10.6
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STOCK PURCHASE AGREEMENT
BETWEEN
INDUSTRIALEX MANUFACTURING CORP.,
AND
XXXX X. XXXXXXXXX, XXXXXX X. XXXXX
AND XXXXXX XXXXXX XXXXX
DATED AS OF MARCH 22, 2000
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TABLE OF CONTENTS
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ARTICLE I PURCHASE AND SALE.......................................................1
1.1 The Purchase and Sale...................................................1
1.2 Purchase Price..........................................................1
ARTICLE II THE CLOSING.............................................................2
2.1 Closing Date............................................................2
2.2 Stockholder Deliveries..................................................2
2.3 Industrialex Deliveries.................................................2
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
STOCKHOLDERS AND THE COMPANY............................................2
3.1 Existence, Good Standing, Corporate Authority, Compliance With Law......2
3.2 Authorization, Validity, and Effect of Agreements.......................3
3.3 Capitalization; No Liens on Shares......................................3
3.4 Other Interests.........................................................4
3.5 No Violation............................................................4
3.6 Financial Statements....................................................4
3.7 Absence of Undisclosed Liabilities......................................4
3.8 Absence of Certain Changes or Events....................................5
3.9 Contracts...............................................................7
3.10 Title to Assets.........................................................8
3.11 Adequacy of Assets......................................................8
3.12 Condition of Inventory, Property, Plant, and Equipment..................8
3.13 Accounts Receivable.....................................................9
3.14 Litigation Claims and Proceedings.......................................9
3.15 Taxes...................................................................9
3.16 Proprietary Rights.....................................................10
3.17 Royalties..............................................................12
3.18 Labor Relations........................................................12
3.19 Personnel..............................................................12
3.20 Transactions With Affiliates...........................................12
3.21 Permits; Compliance With Laws..........................................13
3.22 Environmental Matters..................................................13
3.23 ERISA..................................................................14
3.24 Properties.............................................................14
3.25 Insurance..............................................................15
3.26 Brokerage and Related Fees.............................................16
3.27 Disclosure; Knowledge..................................................16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
INDUSTRIALEX...........................................................16
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4.1 Existence; Good Standing; Corporate Authority; Compliance with Law.....16
4.2 Authorization, Validity, and Effect of Agreements......................17
4.3 Capitalization.........................................................17
4.4 Other Interests........................................................17
4.5 No Violation...........................................................17
4.6 Financial Statements...................................................18
4.7 Absence of Undisclosed Liabilities.....................................18
4.8 Absence of Change......................................................18
4.9 Contracts..............................................................18
4.10 Title to Assets........................................................19
4.11 Adequacy of Assets.....................................................19
4.12 Condition of Inventory, Property, Plant, and Equipment.................19
4.13 Accounts Receivable....................................................19
4.14 Litigation, Claims and Proceedings.....................................20
4.15 Taxes..................................................................20
4.16 Proprietary Rights.....................................................21
4.17 Royalties..............................................................21
4.18 Labor Relations........................................................21
4.19 Transactions With Affiliates...........................................21
4.20 Permits; Compliance With Laws..........................................21
4.21 ERISA..................................................................21
4.22 Brokerage..............................................................22
4.23 Disclosure; Knowledge..................................................22
ARTICLE V COVENANTS..............................................................22
5.1 Filings; Other Action..................................................22
5.2 Further Action.........................................................22
5.3 Expenses...............................................................23
5.4 Employment Agreements..................................................23
5.5 Banking Matters........................................................23
5.6 Officers and Directors of the Company..................................23
5.7 Investment Representations; Lockup Agreements..........................23
5.8 Liquidity of Industrialex Common Stock.................................23
5.9 Release of Guarantys...................................................24
ARTICLE VI CONDITIONS.............................................................24
6.1 Conditions to Each Party's Obligation to Effect the Acquisition........24
6.2 Conditions to Obligation of the Company to Effect the Acquisition......25
6.3 Conditions to Obligation of Industrialex to Effect the Acquisition.....26
ARTICLE VII INDEMNIFICATION........................................................27
7.1 Survival of Representations............................................27
7.2 Indemnity..............................................................28
7.3 Limitations on Indemnification.........................................28
7.4 Conditions of Indemnification of Third Party Claims....................29
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7.5 Arbitration............................................................30
7.6 Interest...............................................................31
7.7 Tax Audits and Claims..................................................31
ARTICLE VIII TERMINATION............................................................32
8.1 Termination of Agreement...............................................32
8.2 Procedure Upon Termination.............................................32
ARTICLE IX CONFIDENTIALITY........................................................33
9.1 Confidentiality Covenants..............................................33
9.2 Disclosure Pursuant to Legal Process...................................34
9.3 Termination of Confidentiality Obligations.............................35
ARTICLE X GENERAL PROVISIONS.....................................................35
10.1 Nondisclosure of this Agreement........................................35
10.2 Notices................................................................35
10.3 Assignment, Binding Effect.............................................36
10.4 Entire Agreement.......................................................36
10.5 Amendment..............................................................36
10.6 Governing Law..........................................................36
10.7 Counterparts...........................................................36
10.8 Headings...............................................................37
10.9 Interpretation.........................................................37
10.10 Waivers................................................................37
10.11 Incorporation of Exhibits..............................................37
10.12 Severability...........................................................37
10.13 Enforcement of Agreement...............................................37
10.14 Consent................................................................37
EXHIBIT A List of Stockholders and Ownership of each Stockholder
EXHIBIT B Employment Agreement
EXHIBIT C Investment Representation and Lock-Up Agreement
EXHIBIT D Opinion of Parent Counsel
EXHIBIT E Opinion of Company Counsel
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INDEX OF DEFINITIONS
1999 Company Balance Sheet........................................................5
1999 Industrialex Balance Sheet..................................................19
Acquisition.......................................................................1
Activities.......................................................................13
Agreement ........................................................................1
Stockholders......................................................................1
Company ........................................................................1
Seller Shares.....................................................................1
Company Common Stock..............................................................1
Acquisition.......................................................................1
Purchase Price....................................................................1
Special Warrants..................................................................2
Closing ........................................................................2
Closing Date......................................................................2
Company Financial Statements......................................................4
1999 Company Balance Sheet........................................................5
Proprietary Rights................................................................6
Company Material Adverse Effect...................................................7
Contracts ........................................................................8
Permitted Liens...................................................................8
Parachute payments...............................................................10
CERCLA .......................................................................13
Activities.......................................................................13
Hazardous waste..................................................................13
RCRA .......................................................................13
Hazardous Material...............................................................14
Environmental Requirement........................................................14
ERISA Affiliate..................................................................14
ERISA .......................................................................14
Real Property....................................................................15
Industrialex Common Stock........................................................18
Industrialex Financial Statements................................................18
1999 Industrialex Balance Sheet..................................................19
Industrialex Material Adverse Effect.............................................19
Industrialex Contracts...........................................................19
Permitted Liens..................................................................19
Parachute payments...............................................................21
Industrialex Indemnified Parties.................................................28
Company Indemnified Parties......................................................29
Deductible.......................................................................30
Indemnified Party................................................................30
Indemnifying Party...............................................................30
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Claim Notice.....................................................................30
Notice Period....................................................................30
Company Breakup Fee..............................................................34
Industrialex Breakup Fee.........................................................34
Receiving Party..................................................................35
Disclosing Party.................................................................35
Representatives..................................................................35
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of March
22, 2000 between Industrialex Manufacturing Corp., a Colorado corporation
("Industrialex") and Xxxx X. Xxxxxxxxx, Xxxxxx X. Xxxxx, and Xxxxxx Xxxxxx Xxxxx
(the "Stockholders"), being all of the shareholders of Broomfield Industrial
Painting, Inc., a Colorado corporation (the "Company").
RECITALS
A. The Stockholders own, as set forth in EXHIBIT A hereto, an
aggregate of __________ shares (the "Seller Shares") of outstanding common
stock, ________ par value per share, of the Company (the "Company Common
Stock"), which Seller Shares constitute all of the issued and outstanding shares
of the capital stock of the Company.
B. Industrialex desires to acquire from the Stockholders, and the
Stockholders desire to sell to Industrialex, all of the Seller Shares owned by
the Stockholders as set forth on EXHIBIT A hereto, all on the terms and subject
to the conditions set forth in this Agreement (the "Acquisition").
C. The Stockholders and the Board of Directors of Industrialex have
approved and adopted this Agreement and the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants, and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 THE PURCHASE AND SALE. Subject to the terms and conditions of this
Agreement, at the Effective Time (as hereinafter defined), the Stockholders
agree to sell, convey, transfer and deliver to Industrialex at the Closing, and
Industrialex agrees to purchase from Stockholders at the Closing, effective as
of the Effective Date, all of the Seller Shares free and clear of any and all
liens, security interests, claims, charges, encumbrances and rights of others
whatsoever.
1.2 PURCHASE PRICE. The aggregate purchase price (the "Purchase
Price") for the Seller Shares shall be $925,000. The Purchase Price shall be
paid at the Closing as follows:
a. The sum of $425,000 shall be paid to the Stockholders in the
proportions set forth on EXHIBIT A. Payment shall be made in cash or immediately
available funds pursuant to wire instructions provided to Industrialex by the
Stockholders prior to Closing.
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b. An aggregate of 500,000 special warrants (the "Special
Warrants"), each of which shall be convertible, for no additional consideration,
into one share of Industrialex common stock, shall be delivered.
ARTICLE II
THE CLOSING
2.1 CLOSING DATE. Subject to the terms and conditions of this
Agreement, the closing of the Acquisition (the "Closing") shall take place at
the offices of Xxxxx, Xxxxxx & Xxxxxx LLP at 000 00xx Xxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxxxxx 00000 at 10:00 a.m., local time, on April 4, 2000 or at such
other time, date, or place as Industrialex and the Company may mutually agree.
The date on which the Closing occurs is hereinafter referred to as the "Closing
Date."
2.2 STOCKHOLDER DELIVERIES. At the Closing, each Stockholder shall
deliver to Industrialex a certificate or certificates, duly endorsed to
Industrialex, representing that number of Seller Shares owned by such
Stockholder as set forth on EXHIBIT A, and the certificates, opinions and
agreements, provided for in Section 6.3(a), (g), (h), (j) and (k).
2.3 INDUSTRIALEX DELIVERIES. At the Closing, Industrialex shall
deliver to each of the Stockholders cash or immediately available funds in the
amount provided for on EXHIBIT A, and a Special Warrant Agreement or
certificates representing the number of Special Warrants provided for on EXHIBIT
A, and the certificates, opinions and agreements provided for in Section 6.2(a),
(c), (d) (e) and (f).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE
STOCKHOLDERS AND THE COMPANY
The Stockholders represent and warrant to Industrialex as of the date
of this Agreement as follows:
3.1 EXISTENCE, GOOD STANDING, CORPORATE AUTHORITY, COMPLIANCE WITH
LAW.
(a) The Company is a corporation duly incorporated, validly
existing, and in good standing under the laws of the State of Colorado. The
Company is not required, by reason of the character of the properties owned or
leased by it or the transaction of its business in any other jurisdiction, to be
licensed or qualified to do business as a foreign corporation in any such
jurisdiction.
(b) The Company has all requisite corporate power and authority to
own, operate, and lease its properties and carry on its business as presently
conducted and as proposed to be conducted.
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(c) The copies of the Company's Articles of Incorporation and
Bylaws, which have been delivered to Industrialex, include any and all
amendments made thereto at any time prior to the date of this Agreement and are
true, correct, and complete.
(d) The Company's corporate minute books are accurate as to their
content. The meetings of the directors or shareholders referred to in the
corporate minute book were duly called and held, and the signatures appearing on
all documents contained therein are the true signatures of the persons
purporting to have executed the same and no minutes of meetings or written
consents of the directors or stockholders of the Company are omitted from such
minute book that would contain any resolutions or other actions that would be
inconsistent with any of the representations and warranties contained in this
Article III or prevent or limit any of the transactions contemplated by this
Agreement. Schedule 3.1 of the Company Disclosure Schedule sets forth the names
of all directors of the Company and the names and offices held by all officers
of the Company as of the date hereof.
3.2 AUTHORIZATION, VALIDITY, AND EFFECT OF AGREEMENTS. The Company has
the requisite corporate power and authority to execute and deliver this
Agreement and all agreements and documents contemplated hereby. The consummation
by the Company of the transactions contemplated hereby has been duly authorized
by all requisite corporate action of the Company. This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by Industrialex, constitutes, and all agreements and
documents contemplated hereby (when executed and delivered pursuant hereto for
value received) will constitute valid and legally binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms, except to the extent that enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, or other similar laws relating to creditors'
rights and general principles of equity.
3.3 CAPITALIZATION; NO LIENS ON SHARES.
(a) The authorized capital stock of the Company consists of
_________ shares of Company Common Stock, of which ________ shares are issued
and outstanding. All of the issued and outstanding shares of Company Common
Stock have been duly authorized, are validly issued, fully paid, and
nonassessable, and are held of record by the Stockholders, as set forth in
EXHIBIT A, free and clear of preemptive or similar rights. There are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require the Company to issue, sell, or otherwise cause to become
outstanding any of its capital stock, and no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar rights with
respect to the Company. There are no voting trusts, proxies, or other agreements
or understandings with respect to the voting of the capital stock of the
Company.
(b) The Stockholders own the Seller Shares free and clear of any
liens, restrictions, security interests, claims, rights of another, or
encumbrances other than the rights and obligations arising under this Agreement,
and none of the Seller Shares is subject to any outstanding
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option, warrant, call, or similar right of any other person to acquire the same,
nor subject to any restriction on transfer thereof except for restrictions
imposed by applicable federal and state securities laws. The Stockholders have
full power and authority to convey good and marketable title to the Seller
Shares, free and clear of any mortgages, liens, restrictions, security
interests, claims, rights of another or encumbrances.
3.4 OTHER INTERESTS. The Company does not own, directly or indirectly,
any interest or investment (whether equity or debt) in any corporation,
partnership, joint venture, business, trust, or entity other than investments in
short term investment securities.
3.5 NO VIOLATION. Neither the execution and delivery by the Company of
this Agreement and all agreements and documents contemplated hereby nor the
consummation by the Company of the transactions contemplated hereby or thereby
in accordance with the terms hereof or thereof will: (i) conflict with or result
in a breach of any provisions of the Articles of Incorporation or Bylaws of the
Company; (ii) except as set forth in Schedule 3.5 of the Company Disclosure
Schedule, violate, conflict with, result in a breach of any provision of,
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, result in the termination or in a right of
termination or cancellation of, accelerate the performance required by, result
in the triggering of any payment or other obligations pursuant to, result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties of the Company under, or result in being declared void, voidable, or
without further binding effect, any of the terms, conditions, or provisions of
any note, bond, mortgage, indenture, loan agreement, deed of trust, or any
license, franchise, permit, lease, contract, agreement or other instrument,
commitment, or obligation to which the Company is a party, or by which the
Company or any of its properties is bound or affected; (iii) violate any law,
statute, rule, regulation, judgment, or decree applicable to the Company; or
(iv) require any consent, approval, or authorization of, or declaration, filing,
or registration with, any governmental or regulatory authority.
3.6 FINANCIAL STATEMENTS. On or before April 14, 2000, the Company
will deliver to Industrialex audited balance sheets, statements of operations,
and statements of stockholders' equity as of and for the calendar years ended
December 31, 1997, and 1998, accompanied by the audit report of independent
certified public accountants. All such financial statements (the "Company
Financial Statements") will have been prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied throughout the
periods involved except as otherwise set forth therein and present fairly the
financial condition of the Company as of their respective dates and the results
of operations of the Company for the years then ended. The financial books,
records, and work papers of the Company are complete and correct in all material
respects, have been maintained in accordance with good business practice and
accurately reflect the bases for the consolidated financial condition and
results of operations of the Company set forth in the Company Financial
Statements referred to in this Section 3.6. The audited balance sheet of the
Company as of December 31, 1999 (the "1999 Company Balance Sheet") shall reflect
a net book value of at least two hundred thousand dollars ($200,000).
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. The Company does not have any
obligation or liability of any kind (whether accrued, absolute, contingent,
unliquidated, civil, criminal, or
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otherwise and whether due or to become due), including accrued payroll,
commissions, bonuses, retirement benefits or other employee benefit costs and
vacation accruals, whether or not any such liability or obligation would have
been required to be disclosed on a balance sheet prepared in accordance with
GAAP, except as and to the extent reflected or reserved against in the 1999
Company Balance Sheet, or incurred in the ordinary course of business since
December 31, 1999.
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1999,
except as set forth in Schedule 3.8(b) of the Company Disclosure Schedule, and
except as specifically permitted or required by this Agreement or specifically
consented to in writing by Industrialex, the Company has not:
(i) declared, set aside, paid, or made any dividend or
other distribution on or in respect of any shares of its capital stock
or directly or indirectly redeemed, retired, purchased, or otherwise
acquired any such shares or any option, warrant, conversion privilege,
preemptive right, or other right or agreement to acquire the same or
any other securities convertible into or evidencing the right to
purchase or otherwise acquire the same;
(ii) made any amendments to its Articles of
Incorporation or Bylaws:
(iii) made any change in the number of shares of its
capital stock authorized, issued, or outstanding, or authorized,
issued or granted, any option, warrant, conversion privilege,
preemptive right, or other right to acquire the same or any other
securities convertible into or evidencing the right to acquire the
same;
(iv) incurred any indebtedness for borrowed money;
(v) incurred any obligation or liability (contingent or
otherwise) except (i) normal trade or business obligations incurred in
the ordinary course of business, the performance of which will not,
individually or in the aggregate, have a Company Material Adverse
Effect and (ii) obligations under the contracts, agreements and leases
described in Schedule 3.9 of the Company Disclosure Schedule, the
performance of which will not, individually or in the aggregate, have
a Company Material Adverse Effect;
(vi) discharged or satisfied any lien or encumbrance or
paid any obligations or liability (fixed or contingent) other than
current liabilities paid to unrelated parties, wages paid to officers
and employees and director's fees paid to directors, each in the
ordinary course of business;
(vii) mortgaged, pledged, or subjected to any lien,
charge, or other encumbrance any of its properties or assets (tangible
or intangible) except for Permitted Liens (as defined in Section 3.10
below).
(viii) sold, assigned, leased, transferred or otherwise
disposed of, or agreed to sell, assign, lease, transfer or otherwise
dispose of, any of its tangible assets other than sales of inventory
in the ordinary course of business;
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(ix) other than in the ordinary course of business,
sold, assigned, licensed, transferred, or otherwise disposed of, or
agreed to sell, assign, license, transfer or otherwise dispose of, any
of its patents, inventions, shop rights, know-how, trade secrets,
confidential information, registered or unregistered trademarks,
service marks, logos, corporate names, trade names, and other
trademark rights, trade dress, or other designations or combinations
of such designations that are distinctive of its goods or services and
that are used by the Company in a manner that identifies its goods or
services and distinguishes them from the goods or services of others,
works of authorship and any registered or unregistered copyright
therein, or other intangible assets, and all registrations for, and
applications for registration of, any of the foregoing (collectively,
"Proprietary Rights") or disclosed any of its confidential Proprietary
Rights to any person (other than Industrialex);
(x) entered into any transaction, contract, or
commitment other than in the ordinary course of business;
(xi) made any capital expenditures or any commitment
therefor in excess of $5,000 in the aggregate;
(xii) adopted or made any change in any executive
compensation plan, bonus plan, incentive compensation plan, deferred
compensation agreement, or other employee benefit plan or arrangement;
(xiii) entered into any employment or consulting
agreement or arrangement, or, except for normal bonuses or wage or
salary increases pursuant to and consistent with existing plans or
programs and consistent with past practices, granted or paid any
bonus, or made or granted any general wage or salary increase or any
specific increase in the wages or salary of any employee;
(xiv) suffered any casualty loss or damage, whether or
not such loss or damage shall have been covered by insurance;
(xv) canceled or compromised any debt or claim except
for adjustments made in the ordinary course of business that, in the
aggregate, are not material, or waived or released any rights that are
material;
(xvi) terminated, amended, or modified any agreement
or instrument described in Schedule 3.9 of the Company Disclosure
Schedule;
(xvii) entered into any transaction with any
stockholder, officer, director, or key employee of the Company or any
affiliate of any such person other than the payment of wages and
salaries and other benefits under employee benefit plans in existence
prior to December 31, 1999;
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(xviii) made any loans or advances to, guaranties for
the benefit of, or investments in, any person (other than customary
wage or travel advances in accordance with past practices);
(xix) made cash charitable or political contributions
in excess of $1,000 in the aggregate;
(xx) lost any supplier or suppliers which loss or
losses, individually or in the aggregate, has had, or could reasonably
be expected to have, a Company Material Adverse Effect;
(xxi) lost any customer or customers which loss or
losses, individually or in the aggregate, has had, or could reasonably
be expected to have, a Company Material Adverse Effect;
(xxii) suffered the loss of services of any employee,
whether voluntarily or involuntarily, which loss or losses,
individually or in the aggregate, has had, or could reasonably be
expected to have, a Company Material Adverse Effect;
(xxiii) had any material change in its relations with
its employees;
(xxiv) merged or consolidated with, or acquired all or
substantially all of the assets, capital stock, or business of any
other person;
(xxv) introduced any material change with respect to
the operation of its business, including its method of accounting; or
(xxvi) agreed or committed to do any of the things
described in this Section 3.8.
A "Company Material Adverse Effect" means a material adverse change in
the business, properties, financial condition, results of operations, or
prospects of the Company, taken as a whole.
3.9 CONTRACTS. Schedule 3.9 of the Company Disclosure Schedule
contains a list of all written or oral contracts, commitments, leases, and other
agreements (including, without limitation, promissory notes, loan agreements,
and other evidences of indebtedness, guarantees, agreements with distributors,
suppliers, dealers, franchisors and customers, and service agreements) to which
the Company is a party or by which the Company or its properties are bound
pursuant to which the obligations thereunder of either party thereto are, or are
contemplated as being, $5,000 or more, together with any personal guarantees of
the foregoing made by the Stockholders, or any of them (collectively, the
"Contracts"). The Company has delivered to Industrialex a correct and complete
copy of each written agreement listed in Schedule 3.9 and a written summary
setting forth the terms and conditions of each oral agreement referred to in
Schedule 3.9. With respect to each such agreement:
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(a) the agreement is legal, valid, binding, enforceable, and in
full force and effect;
(b) to the knowledge of the Company, the agreement will continue
to be legal, valid, binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby;
(c) to the knowledge of the Company, no party is in breach or
default, and no event has occurred which, with notice or lapse of time would
constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement; and
(d) no party has repudiated any provision of the agreement.
3.10 TITLE TO ASSETS. Except as set forth in Schedule 3.10 of the
Company Disclosure Schedule (the "Permitted Liens"), the Company has good title,
free and clear of all liens, charges, and encumbrances (except for (a) liens for
non-delinquent taxes and assessments, and (b) liens of landlords and other
lessors arising under statute), to, or a valid leasehold interest in, all of the
personal property (i) reflected on the 1999 Company Balance Sheet or acquired by
the Company subsequent to the date thereof (other than assets that have been
sold or otherwise disposed of in the ordinary course of business since December
31, 1999, or (ii) used in the business or operations of the Company.
3.11 ADEQUACY OF ASSETS. The Company owns or has a valid leasehold
interest in all assets, real and personal properties, contract rights and
licenses necessary for the continued operation of the Company in substantially
the same manner in which it has been and is now operating. Except as set forth
on Schedule 3.11: (a) the Company owns or has the right to use pursuant to
license, sublicense, agreement, or permission all Proprietary Rights (as defined
in Section 3.16) necessary for the operation of the business of the Company as
presently conducted, (b) each Proprietary Right owned or used by the Company
immediately prior to the Effective Time hereunder will be owned or available for
use by the Company on substantially similar terms and conditions immediately
subsequent to the Effective Time hereunder, and (c) the Company has taken all
commercially reasonable action to maintain and protect each Proprietary Right
that it owns or uses.
3.12 CONDITION OF INVENTORY, PROPERTY, PLANT, AND EQUIPMENT. Schedule
3.12 of the Company Disclosure Schedule sets forth a list of the fixed assets of
the Company, together with the depreciation schedule associated with such fixed
assets. The inventory of the Company consists of items of quality and quantity
usable and saleable in the ordinary course of business of the Company, except
for items reserved against or written off on the 1999 Company Balance Sheet. All
property, plant, and equipment used by the Company in the conduct of its
business has been maintained in accordance with standard industry practices and
to the knowledge of the Company, is in good operating condition and repair,
ordinary wear and tear excepted, and there are no material defects in such
property, plant, or equipment. Buyer has had an opportunity to examine the plant
and equipment and, except for any defects not observable in such an examination
but known to the Company, Buyer shall accept the plant and equipment in its
current condition.
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3.13 ACCOUNTS RECEIVABLE. All of the accounts, notes, and loans
receivable that have been recorded on the books of the Company are bona fide and
represent amounts validly due for goods sold or services rendered. Except as
disclosed on Schedule 3.13 of the Company Disclosure Schedule (a) all of such
accounts, notes, and loans receivable are owned by the Company free and clear of
any security interest, lien, encumbrance, or other charge; (b) none of such
accounts, notes, or loans receivable is subject to any offsets or claims of
offset; and (c) none of the obligors of such accounts, notes, or loans
receivable has given notice that it will or may refuse to pay the full amount or
any portion thereof. Except for the amount of the Company's allowance for bad
debts set forth in the 1999 Company Balance Sheet, which will be established in
accordance with GAAP consistent with past practice, all of such accounts, notes
and loans receivable will be collectible within 120 days after the Closing Date.
The Company has valid and binding purchase orders in place with respect to all
of the inventory recorded on the books of the Company, except for stock items
carried as inventory in the ordinary course of business of the Company.
3.14 LITIGATION CLAIMS AND PROCEEDINGS. Except as set forth in
Schedule 3.14 of the Company Disclosure Schedule, there are no actions, suits,
legal or administrative proceedings or investigations pending or threatened,
against or relating to the Company, its officers, directors or employees, its
properties, assets or business or the transactions contemplated by this
Agreement, and neither the Company nor the Stockholders know of, nor have any
reason to be aware of, any basis for the same.
3.15 TAXES. Except as set forth in Schedule 3.15 of the Company
Disclosure Schedule, all returns and reports of all Taxes (as hereinafter
defined) required to be filed by the Company have been timely filed and are
true, correct, and complete in all material respects, and all Taxes payable
pursuant thereto have been timely paid. Except as set forth in Schedule 3.15 of
the Company Disclosure Schedule, no deficiency or adjustment in respect of any
Taxes that was assessed against the Company remains unpaid and no such claim or
assessment is pending or, to the knowledge of the Company, threatened. The
Company has made all withholding of Taxes required to be made under all
applicable federal, state, and local tax regulations and such withholdings have
either been paid on a timely basis to the respective governmental agencies or
set aside in accounts for such purpose or accrued, reserved against and entered
upon the books of the Company. There are no outstanding agreements or waivers
extending the statutory period of limitations applicable to any tax return or
tax liability of the Company, and to the knowledge of the Company, there is no
proposed liability for any Taxes for which there is not an adequate reserve
reflected on the 1999 Company Balance Sheet. The Company has not filed any
consent with the Internal Revenue Service described in Section 341(f) of the
Internal Revenue Code of 1986 ("the Code"). The unpaid Taxes of the Company (i)
did not, as of the end of the most recent period for which financial statements
have been prepared, exceed the reserve for Tax liability (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income), and (ii) do not exceed that reserve as adjusted for the
passage of time through the Effective Time in accordance with the past custom
and practice of the Company in filing its Tax returns. The Company does not
reasonably expect any authority to assess any additional Taxes for any period
for which Tax returns have been filed. There is no dispute or claim concerning
any Tax liability of the Company either (i) claimed or raised by any authority
in writing, or (ii) as to which the Company has knowledge. The Company has
delivered to Industrialex correct and complete copies of all federal and state
income Tax returns of the Company, examination
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reports and statements of deficiencies assessed against or agreed to by the
Company for all years beginning in or after 1992. The Company is not a party to
any Tax allocation or sharing agreement. The Company has not been a member of an
affiliated group filing federal income Tax Returns, and does not have any
liability for the Taxes of any person (other than the Company) under Treas. Reg.
Section 1.1502-6 or any similar provision of state, local or foreign law, as a
transferee or successor, by contract or otherwise. No item of income
attributable to transactions occurring on or before the Effective Time will be
required to be included in taxable income by the Company in a subsequent taxable
year by reason of the Company reporting income on the installment sales method
of accounting, the cash method of accounting, the completed contract method of
accounting or the percentage of complete-capitalized cost method of accounting.
The Company has not made, and is under no obligation to make, payments that are
or, if made, would be, "parachute payments" under Section 280G of the Code, and
no such obligation will arise as a result of this Agreement or other agreements
entered into in connection with this Agreement. "Taxes" shall mean all federal,
state, county, local, foreign and other taxes and governmental assessments,
including but not limited to, income taxes, estimated taxes, withholding taxes,
transfer taxes, excise taxes, sales taxes, real and personal property taxes, ad
valorem taxes, payroll-related taxes, employment taxes, franchise taxes and
import duties, together with any related liabilities penalties, fines or
additions to tax and interest.
3.16 PROPRIETARY RIGHTS.
(a) Except as set forth on Schedule 3.16(a) of the Company
Disclosure Schedule: (i) the Company has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Proprietary Rights of
third parties, (ii) the Company (and its employees with responsibility for
Proprietary Rights matters) has not received any written charge, complaint,
claims, demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that the Company must
license or refrain from using any Proprietary Rights of any third party), (iii)
to the knowledge of the Company, there is no basis for any as-yet unasserted
charge, complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that the
Company must license or refrain from using any Proprietary Rights of any third
party), and (iv) to the knowledge of the Company, no third party has interfered
with, infringed upon, misappropriated, or otherwise come into conflict with any
Proprietary Rights of the Company.
(b) Schedule 3.16(b) of the Company Disclosure Schedule
identifies each Proprietary Right that the Company owns. Schedule 3.16(b) of the
Company Disclosure Schedule identifies each registration that has been issued to
the Company with respect to any of its Proprietary Rights, identifies each
pending application for registration that the Company has made with respect to
any of its Proprietary Rights, identifies each item of copyrightable Proprietary
Rights (whether or not registration has been sought), and identifies each
license, agreement, or other permission which Company has granted to any third
party with respect to any of its Proprietary Rights, including any service,
nondisclosure or escrow agreements (together with any exceptions). The Company
has delivered or upon Industrialex's request has made available to Industrialex
upon specific request therefor correct and complete copies of all such patents,
registrations, applications, licenses, agreements, and permissions (as amended
to date). Schedule 3.16(b) of the Company Disclosure Schedule also identifies
each trade name or unregistered trademark used by Company in connection
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with its business. Except as set forth in Schedule 3.16(b) of the Company
Disclosure Schedule, with respect to each Proprietary Right required to be
identified in Schedule 3.16(b) of the Company Disclosure Schedule and with
respect to each item of copyrightable Proprietary Rights:
(i) the Company possesses all right, title, and
interest in and to the Proprietary Right, free and clear of any lien,
license, or other restriction;
(ii) the Proprietary Right is not subject to any
outstanding injunction, judgment, order, decree, ruling, or charge;
(iii) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or
threatened that challenges the legality, validity, enforceability,
manufacture, use or the ability to authorize the use (including use by
way of reproduction of copies, distribution of copies, preparation of
derivative works, public performance or display, or any other use of
any kind or nature), sale or ownership of the Proprietary Right; and
(iv) the Company has never agreed to indemnify any
person for or against any interference, infringement,
misappropriation, or other conflict with respect to the Proprietary
Right.
(c) Schedule 3.16(c) of the Company Disclosure Schedule
identifies each Proprietary Right that any third party owns and that Company
uses pursuant to license, sublicense, agreement, or permission. The Company has
delivered or upon Industrialex's request made available to Industrialex correct
and complete copies of all such licenses, sublicenses, agreements, and
permissions (as amended to date). Except as set forth on Schedule 3.16(c) of the
Company Disclosure Schedule, with respect to each Proprietary Right required to
be identified in Schedule 3.16(c) of the Company Disclosure Schedule:
(i) the license, sublicense, agreement, or permission
covering the Proprietary Right is legal, valid, binding, enforceable
against the Company and against the other parties thereto, and in full
force and effect;
(ii) the license, sublicense, agreement, or permission
will continue to be legal, valid, binding, enforceable against the
Company and against the other parties thereto, and in full force and
effect on substantially similar terms following the Effective Time;
(iii) to the knowledge of the Company, no party to the
license, sublicense, agreement, or permission is in breach or default,
and no event has occurred which with notice or lapse of time would
constitute a breach or default or permit termination, modification, or
acceleration thereunder;
(iv) no party to the license, sublicense, agreement,
or permission has repudiated in writing any provision thereof;
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(v) with respect to each sublicense, the
representations and warranties set forth in subsections (i) through
(iv) above are true and correct with respect to the underlying
license;
(vi) to the knowledge of the Company, the underlying
Proprietary Right is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
(vii) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or
threatened, that challenges the legality, validity, or enforceability
of the underlying Proprietary Right;
(viii) the Company has not granted any sublicense or
similar right with respect to the license, sublicense, agreement, or
permission; and
(ix) no such licenses, agreements or permissions
commit the Company to continued maintenance, support, improvement,
upgrade or similar obligation with respect to any of the Proprietary
Rights, which obligation cannot be terminated by the Company upon
notice of ninety (90) days or less.
(d) Schedules 3.16(b) and 3.16(c) of the Company Disclosure
Schedule identify every material Proprietary Right used by the Company in the
conduct of its business.
3.17 ROYALTIES. Except as set forth on Schedule 3.17 of the Company
Disclosure Schedule, all royalties, license fees, and other fees relating to the
Company's use of Proprietary Rights have been timely paid. Except as set forth
in Schedule 3.17 of the Company Disclosure Schedule, the method used by the
Company to calculate all royalties, license fees, and other fees relating to the
Company's use of Proprietary Rights is correct and accurate and in accordance
with the terms of any agreements the Company has with any third party relating
to the use of such party's Proprietary Rights.
3.18 LABOR RELATIONS. The employee relations of the Company are good
and there is no pending or threatened labor dispute or union organization
campaign. None of the employees of the Company are represented by any labor
union or organization. The Company is in compliance with all federal and state
laws respecting employment and employment practices, terms and conditions of
employment, and wages and hours, and has not engaged in any unfair labor
practices.
3.19 PERSONNEL. Attached hereto as Schedule 3.19 of the Company
Disclosure Schedule is a list of the names and annual rates of compensation of
the directors and executive officers of the Company, and of the employees of the
Company whose annual rates of compensation during fiscal year 1999 (including
base salary, bonus, commission and incentive pay) exceeded $25,000.
3.20 TRANSACTIONS WITH AFFILIATES. Except as set forth in Schedule
3.20 of the Company Disclosure Schedule, the Company is not a party to any
contract, lease, agreement, or other commitment with any officer, director, or
stockholder of the Company or any affiliate of any such
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person, and there are no loans outstanding from the Company to, or to the
Company from, any such person or any affiliate of any such person.
3.21 PERMITS; COMPLIANCE WITH LAWS. Schedule 3.21 of the Company
Disclosure Schedule contains a true, correct, and complete list of all permits,
licenses, consents, and authorizations of any government or governmental
authority held by the Company. Except as set forth in Schedule 3.21 of the
Company Disclosure Schedule, the Company holds all permits, licenses, consents,
and authorizations issued by any government or governmental authority that are
necessary for the conduct of its business. The Company has not received any
written notice of any violation of any law, ordinance, regulation, permit or
order applicable to the Company or the business conducted by it. The conduct of
the business of the Company, as conducted currently and within the last five
years prior to the Closing Date, complies with all applicable laws, ordinances,
regulations, and permits, and the Company is not in violation of any order,
judgment or decree of any court, governmental authority or arbitration board or
tribunal.
3.22 ENVIRONMENTAL MATTERS. During the period in which the Company has
owned and/or occupied the Company Real Property, there has been no "release or
threatened release of a hazardous substance" (as defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA")) or any other release, emission, disposal, or discharge into the
environment or any use, storage, transport or handling (collectively,
"activities") of Hazardous Material (as defined below) on, under, about, or from
the Company Real Property other than as expressly authorized by applicable law,
ordinance, permit, order or other authorization. All "hazardous waste" (as
defined in the Resource Conservation and Recovery Act of 1976, as amended
("RCRA") and the regulations thereunder) generated at the Company's properties
have been disposed of at sites that maintain valid permits under RCRA and are in
full compliance with such permits and any other applicable Environmental
Requirement (as defined below). There are no underground tanks, PCBs, or
asbestos containing materials on the Company Real Property. Except as set forth
in Schedule 3.22 of the Company Disclosure Schedule, the Company has not
received any written notice, and is not aware of any threat of any formal or
informal assertion by any governmental agency or other person that the Company
or any predecessor business or owner or operator of the Company Real Property
may be a responsible or potentially responsible party in connection with any
violation or obligation claims arising under any Environmental Requirement at
any site or facility (including the Company Real Property itself). "Hazardous
Material" shall mean any substance (i) the presence of which requires reporting,
investigation or remediation under any applicable statute, regulation, ordinance
or order; or (ii) which is defined as a "hazardous waste," "hazardous
substance," pollutant or contaminant under any statute, regulation, rule, or
ordinance of any governmental authority having jurisdiction; or (iii) which is
toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic, or otherwise hazardous and is regulated by any governmental authority
having jurisdiction. "Environmental Requirement" shall mean all applicable
statutes, laws, regulations, rules, ordinances, codes, licenses, permits,
orders, standards, guidelines, policies, and similar items of any governmental
authority having jurisdiction and all applicable judicial, administrative, and
regulatory decrees, judgments, and orders and common law relating to the
protection of human health or the environment including, without limitation, all
requirements pertaining to the reporting, licensing, permitting, use, handling,
generation, storage, treatment, transportation, disposal, release, discharge,
investigation, and remediation of Hazardous Material.
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3.23 ERISA. Except as set forth in Schedule 3.23 of the Company
Disclosure Schedule, neither the Company nor any trade or business (whether or
not incorporated) under common control with the Company within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code) (an "ERISA
Affiliate") of the Company maintains or contributes to or is obligated to
contribute to, and has ever maintained or contributed to or been obligated to
contribute to, (i) any employee pension plan within the meaning of Section 3 (2)
of the Employee Retirement Income Security Act of 1974, as amended, and the
regulations promulgated and rulings issued thereunder ("ERISA") (an Employee
Pension Plan) or any employee welfare benefit plan within the meaning of Section
3 (2) of ERISA (an Employee Welfare Benefit Plan). No Employee Welfare Benefit
Plan provides health benefits to an employee after the employee's termination of
employment except as required under the ERISA and the Code. With respect to the
Plan(s) disclosed in Schedule 3.23 of the Company Disclosure Schedule:
(i) Each such Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code, and other
federal or state law.
(ii) There are no pending claims (other than routine
claims for benefits) or, to the knowledge of the Company, threatened
claims, actions, or lawsuits, or action by any governmental authority,
with respect to any such Plan, and there has been no prohibited
transaction or violation of the fiduciary responsibility rules with
respect to any such Plan.
(iii) The execution of, and the performance of the
transactions contemplated in, this Agreement will not constitute an
event under any Plan that will or is reasonably expected to result in
any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any employee.
3.24 PROPERTIES.
(a) Attached hereto as Schedule 3.24 of the Company Disclosure
Schedule is a description of all of the Company's interests in real property
(including, without limitation, leasehold interests) used or occupied by it in
the conduct of the Business (the "Real Property"). Except as expressly set forth
on Schedule 3.24 of the Company Disclosure Schedule, such Real Property is free
and clear of liens, security interests, claims, rights of another, and
encumbrances and is not subject to any rights of way, building use restrictions,
exceptions, variances or limitations which interfere with the use of such
property in the conduct of the business. All real property leases used in the
conduct of the business are described in Schedule 3.24 of the Company Disclosure
Schedule, are in full force and effect, and the Company holds a valid and
existing leasehold interest under each of the leases for the terms set forth on
such schedule. The Company has delivered to Buyer complete and accurate copies
of all materials the Company has concerning such leases. The Company has not
received written notice of any default under the leases and the Company is not
in default under any of the leases. No person has the right to terminate or
accelerate performance under or otherwise modify (including upon the giving
notice or the passage of time) any of such leases, except in
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accordance with the provisions thereof. The Real Property of the Business,
including the real properties leased by the Company for use in the operation of
the Business, is in good operating condition and repair, normal wear and tear
excepted, and is free from any defects of a material nature. To the knowledge of
the Company, there are no existing structural defects in any of the properties.
The plumbing, mechanical, heating, ventilation, air conditioning, electric
wiring and water and sewage systems are in good working order. Except as
otherwise set forth on Schedule 3.24 of the Company Disclosure Schedule, the
Company has full and unrestricted legal and equitable title to all such
properties and assets. The operation of the Real Property in the manner in which
they are now and have been operated does not violate any zoning ordinances,
municipal regulations, or other rules, regulations, or laws. Except as set forth
on Schedule 3.24 of the Company Disclosure Schedule, no covenants, easements,
rights-of-way, or regulations of record impair the uses of the respective
properties of the Company for the purposes for which they are now operated in
the operation of the business of the Company. The Company has not received any
notices, demands, or other directives from any governmental bodies with
jurisdiction over the Real Property asserting that any current or past use of or
condition on or about the Real Property, or any part thereof, may violate, or
otherwise give rise to liability or costs under, any federal, state, or local
laws, rules, or regulations (including without limitation, Environmental
Obligations, as defined in Section 3.22) or any notice stating that any part of
the Real Property may be subject to condemnation or similar proceedings. The
Company is not a "foreign person" as that term is defined in Section 1455 of the
Internal Revenue Code of 1954, as amended, and applicable regulations.
(b) Set forth in Schedule 3.24 of the Company Disclosure Schedule
is a complete list of (a) each vehicle owned or leased by the Company and (b)
each asset of the Company with a book value or fair market value greater than
$5,000. The Company has good and marketable title to, or a valid leasehold
interest in, all of its assets, including without limitation, the assets listed
in Schedule 3.24 of the Company Disclosure Schedule, and all assets used by the
Company in the conduct of its Business, subject to no Security Interests, except
for (a) tax liens for current taxes not yet due; (b) minor imperfections of
title and encumbrances that do not materially detract from or materially
interfere with the present use or value of such assets; and (c) security
interests disclosed in Schedule 3.9 of the Company Disclosure Schedule. All
facilities, machinery, equipment, fixtures, vehicles and other tangible personal
property owned, leased or used by Seller are in good operating condition and
repair, normal wear and tear excepted, are reasonably fit and usable for the
purposes for which they are being used, will not likely require major overhaul
or repair in the foreseeable future, are adequate and sufficient for Seller's
business, as presently conducted, and substantially conform with all applicable
laws, rules and regulations.
3.25 INSURANCE. Attached hereto as Schedule 3.25 of the Company
Disclosure Schedule is a list of all policies of fire, casualty, liability,
property or other forms of insurance and all fidelity bonds held by or
applicable to the Company, which Schedule sets forth in respect of each such
policy the policy name, policy number, carrier, term, type of coverage,
deductible amount of self-insured retention amount, limits of coverage and
annual premium. No event relating to the Company has occurred which will result
in a retroactive upward adjustment of premiums under any such insurance
policies, or which is likely to result in any prospective upward adjustment in
such premiums. All of such insurance policies will remain in full force and
effect following the consummation of the transactions contemplated by this
Agreement. The Company does not have any Liability for which
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any claim may be made against the Company's property, casualty or liability
insurance and no event or circumstance has occurred or arisen that is likely to
result in such a claim.
3.26 BROKERAGE AND RELATED FEES Except as set forth in Schedule 3.26
of the Company Disclosure Schedule, there are no claims for legal, accounting,
financial advisory, or investment bankers' fees, brokerage commissions, finders'
fees, or similar compensation in connection with the transactions contemplated
by this Agreement based on any arrangement or agreement made by or on behalf of
the Company or the Stockholders.
3.27 DISCLOSURE; KNOWLEDGE. No representation or warranty by the
Company or the Stockholders in this Agreement and no statement contained in any
document, certificate, or other writing prepared by the Company or its
representatives and furnished by the Company to Industrialex pursuant to the
provisions hereof, affirmatively misstates a material fact or omits a material
fact necessary to make the statements contained herein or therein not
misleading. Whenever a representation or warranty is made to the knowledge of
the Company, or similar words, it shall mean that all executive officers of the
Company, and all other persons who have any responsibility for those operations
of the Company's business that are pertinent to the representation or warrants,
have been informed of the representation and after consideration and review of
pertinent Company records available to them, have confirmed to the Stockholders
that they know of no facts that would cause the representation to be untrue.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF INDUSTRIALEX
Industrialex represents and warrants to the Stockholders as of the
date of this Agreement as follows:
4.1 EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY; COMPLIANCE WITH
LAW.
(a) Industrialex is a corporation duly incorporated, validly
existing, and in good standing under the laws of Colorado. Industrialex is not
required, by reason of the character of the properties owned or leased by it or
the transaction of its business in any other jurisdiction, to be licensed or
qualified to do business as a foreign corporation in any such jurisdiction.
(b) Industrialex has all requisite corporate power and authority
to own, operate, and lease its properties and carry on its business as presently
conducted and as proposed to be conducted.
(c) The copies of Industrialex's Articles of Incorporation and
Bylaws, which have been delivered to the Company, include any and all amendments
made thereto at any time prior to the date of this Agreement and are true,
correct, and complete.
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(d) Industrialex's corporate minute book is accurate as to its
content. The meetings of the directors or stockholders referred to in the
corporate minute book were duly called and held and the signatures appearing on
all documents contained therein are the true signatures of the persons
purporting to have executed the same and no minutes of meetings or written
consents of the directors or stockholders of Industrialex are omitted from such
minute book that would contain any resolutions or other actions that would be
inconsistent with any of the representations and warranties contained in this
Article IV or prevent or limit any of the transactions contemplated by this
Agreement. Schedule 4.1 of the Industrialex Disclosure Schedule sets forth the
names of all directors of Industrialex and the names and offices held by all
officers of Industrialex as of the date hereof.
4.2 AUTHORIZATION, VALIDITY, AND EFFECT OF AGREEMENTS. Industrialex
has the requisite corporate power and authority to execute and deliver this
Agreement and all agreements and documents contemplated hereby and thereby. The
consummation by Industrialex of the transactions contemplated hereby has been
duly authorized by all requisite corporate action. This Agreement has been duly
executed and delivered by Industrialex and, assuming the due authorization,
execution and delivery by the Company and the Stockholders, constitutes, and all
agreements and documents contemplated hereby (when executed and delivered
pursuant hereto for value received) will constitute, the valid and legally
binding obligations of Industrialex enforceable in accordance with their
respective terms, except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency, moratorium, or other similar laws relating to
creditors' rights and general principles of equity.
4.3 CAPITALIZATION. The authorized capital stock of Industrialex
consists of 50,000,000 shares of common stock, $0.01 par value per share (the
"Industrialex Common Stock"), of which 4,250,000 shares are issued and
outstanding. Industrialex also has outstanding 2,017,000 Special Warrants each
of which is convertible into a share of common stock without payment of
additional consideration to the Industrialex.
4.4 OTHER INTERESTS. Industrialex does not own, directly or
indirectly, any interest or investment (whether equity or debt) in any
corporation, partnership, joint venture, business, trust, or entity other than
investments in short term investment securities.
4.5 NO VIOLATION. Neither the execution and delivery by Industrialex
of this Agreement and all agreements and documents contemplated hereby, nor the
consummation by Industrialex of the transactions contemplated hereby or thereby
in accordance with the terms hereof or thereof, will: (i) conflict with or
result in a breach of any provisions of the Articles of Incorporation, as
amended, or Bylaws of Industrialex; (ii) violate any law, statute, rule,
regulation, judgment, or decree applicable to Industrialex (iii) except as set
forth in Schedule 4.5 of the Industrialex Disclosure Schedule, violate, conflict
with, result in a breach of any provision of, constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
result in the termination or in a right of termination or cancellation of,
accelerate the performance required by, result in the triggering of any payment
or other obligations pursuant to, result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties of Industrialex
under, or result in being declared void, voidable, or without further binding
effect, any of the terms, conditions, or provisions of any note, bond, mortgage,
indenture, loan agreement, deed of trust, or any license, franchise,
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permit, lease, contract, agreement or other instrument, commitment, or
obligation to which Industrialex is a party, or by which Industrialex or any of
their properties is bound or affected; (iii) violate any law, statute, rule,
regulation, judgment, or decree applicable to Industrialex; or (iv) other than
the Regulatory Filings, require any consent, approval, or authorization of, or
declaration, filing, or registration with, any governmental or regulatory
authority.
4.6 FINANCIAL STATEMENTS. On or before April 15, 2000, Industrialex
will deliver to the Company audited balance sheets, statements of operations,
and statements of stockholders' equity as of and for the calendar years ended
December 31, 1997, and 1998 accompanied by the audit report of independent
certified public accountants. All such financial statements (the "Industrialex
Financial Statements") were prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied throughout the periods
involved except as otherwise set forth therein and present fairly the financial
condition of Industrialex as of their respective dates and the results of
operations of Industrialex for the years then ended. The financial books,
records, and work papers of Industrialex are complete and correct in all
material respects, have been maintained in accordance with good business
practice and accurately reflect the bases for the consolidated financial
condition and results of operations of Industrialex set forth in the
Industrialex Financial Statements.
4.7 ABSENCE OF UNDISCLOSED LIABILITIES. Industrialex has no obligation
or liability of any kind (whether accrued, absolute, contingent, unliquidated,
civil, criminal, or otherwise and whether due or to become due), including
accrued payroll, commissions, bonuses, retirement benefits or other employee
benefit costs and vacation accruals, whether or not any such liability or
obligation would have been required to be disclosed on a balance sheet prepared
in accordance with GAAP, except as and to the extent reflected or reserved
against in the Industrialex Balance Sheet, dated December 31, 1999 (the "1999
Industrialex Balance Sheet"), or incurred in the ordinary course of business
since December 31, 1999.
4.8 ABSENCE OF CHANGE. Since December 31, 1999, no event or events
have occurred, including events resulting from actions by Industrialex of the
type described in Section 3.8 hereof, which individually or in the aggregate
have had a Industrialex Material Adverse Effect, as hereafter defined, and there
exists no condition or contingency that could reasonably be expected to result
in a Industrialex Material Adverse Effect. An "Industrialex Material Adverse
Effect" means a material adverse change in the business, properties, financial
condition, results of operations, or prospects of the Industrialex, taken as a
whole.
4.9 CONTRACTS. With respect to each written or oral contract,
commitment, lease, and other agreement (including, without limitation, any
promissory note, loan agreement, and other evidence of indebtedness, guarantee,
agreement with distributors, suppliers, dealers, franchisors and customers, and
service agreements) to which Industrialex is a party or by which Industrialex or
its properties are bound pursuant to which the obligations thereunder of either
party thereto are, or are contemplated as being, $5,000 or more (collectively,
the "Industrialex Contracts"):
(a) the agreement is legal, valid, binding, enforceable, and in
full force and effect;
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(b) the agreement will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby;
(c) to the knowledge of Industrialex, no party is in breach or
default, and no event has occurred which, with notice or lapse of time would
constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement; and
(d) no party has repudiated any provision of the agreement.
4.10 TITLE TO ASSETS. Except as set forth in Schedule 4.10 of the
Industrialex Disclosure Schedule (the "Permitted Liens"), Industrialex has good
title, free and clear of all liens, charges, and encumbrances (except for (a)
liens for non-delinquent taxes and assessments, and (b) liens of landlords and
other lessors arising under statute), to, or a valid leasehold interest in, all
of the personal property (i) reflected on the 1999 Industrialex Balance Sheet or
acquired by Industrialex subsequent to the date thereof (other than assets that
have been sold or otherwise disposed of in the ordinary course of business since
December 31, 1999, or (ii) used in the business or operations of Industrialex.
4.11 ADEQUACY OF ASSETS. Industrialex owns or has a valid leasehold
interest in all assets, real and personal properties, contract rights and
licenses necessary for the continued operation of the Industrialex in
substantially the same manner in which it has been and is now operating. Except
as set forth on Schedule 4.11: (a) Industrialex owns or has the right to use
pursuant to license, sublicense, agreement, or permission all Proprietary Rights
(as defined in Section 3.16) necessary for the operation of the business of
Industrialex as presently conducted, (b) each Proprietary Right owned or used by
Industrialex immediately prior to the Effective Time hereunder will be owned or
available for use by Industrialex on substantially similar terms and conditions
immediately subsequent to the Effective Time hereunder, and (c) Industrialex has
taken all commercially reasonable action to maintain and protect each
Proprietary Right that it owns or uses.
4.12 CONDITION OF INVENTORY, PROPERTY, PLANT, AND EQUIPMENT. Schedule
4.12 of the Industrialex Disclosure Schedule sets forth a list of the fixed
assets of Industrialex, together with the depreciation schedule associated with
such fixed assets. The inventory of Industrialex consists of items of quality
and quantity usable and saleable in the ordinary course of business of
Industrialex, except for items reserved against or written off on the 1999
Industrialex Balance Sheet. All property, plant, and equipment used by
Industrialex in the conduct of its business has been maintained in accordance
with standard industry practices and is in good operating condition and repair,
ordinary wear and tear excepted, and there are no material defects in such
property, plant, or equipment.
4.13 ACCOUNTS RECEIVABLE. All of the accounts, notes, and loans
receivable that have been recorded on the books of Industrialex are bona fide
and represent amounts validly due for goods sold or services rendered. Except as
disclosed on Schedule 4.13 of Industrialex Disclosure Schedule (a) all of such
accounts, notes, and loans receivable are owned by Industrialex free and clear
of any security interest, lien, encumbrance, or other charge; (b) none of such
accounts, notes, or loans receivable is subject to any offsets or claims of
offset; and (c) none of the obligors of such accounts,
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notes, or loans receivable has given notice that it will or may refuse to pay
the full amount or any portion thereof. Except for the amount of Industrialex's
allowance for bad debts set forth in the 1999 Industrialex Balance Sheet, which
will be established in accordance with GAAP consistent with past practice, all
of such accounts, notes and loans receivable will be collectible within 120 days
after the Closing Date.
4.14 LITIGATION, CLAIMS AND PROCEEDINGS. Except as set forth in
Schedule 4.14 of the Industrialex Disclosure Schedule, there are no actions,
suits, legal or administrative proceedings or investigations pending or
threatened, against or relating to Industrialex, their officers, directors or
employees, their properties, assets or business or the transactions contemplated
by this Agreement, and Industrialex does not know of, nor has any reason to be
aware of, any basis for the same.
4.15 TAXES. Except as set forth in Schedule 4.15 of Industrialex
Disclosure Schedule, all returns and reports of all Taxes required to be filed
by Industrialex have been timely filed and are true, correct, and complete in
all material respects, and all Taxes payable pursuant thereto have been timely
paid. Except as set forth in Schedule 4.15 of Industrialex Disclosure Schedule,
no deficiency or adjustment in respect of any Taxes that was assessed against
Industrialex remains unpaid and no such claim or assessment is pending or, to
the knowledge of Industrialex, threatened. Industrialex has made all withholding
of Taxes required to be made under all applicable federal, state, and local tax
regulations and such withholdings have either been paid on a timely basis to the
respective governmental agencies or set aside in accounts for such purpose or
accrued, reserved against and entered upon the books of Industrialex. There are
no outstanding agreements or waivers extending the statutory period of
limitations applicable to any tax return or tax liability of Industrialex, and
to the knowledge of Industrialex, there is no proposed liability for any Taxes
for which there is not an adequate reserve reflected on the 1999 Industrialex
Balance Sheet. Industrialex has not filed any consent with the Internal Revenue
Service described in Section 341(f) of the Code. The unpaid Taxes of
Industrialex (i) did not, as of the end of the most recent period for which
financial statements have been prepared, exceed the reserve for Tax liability
(rather than any reserve for deferred Taxes established to reflect timing
differences between book and Tax income), and (ii) do not exceed that reserve as
adjusted for the passage of time through the Effective Time in accordance with
the past custom and practice of Industrialex in filing its Tax returns.
Industrialex does not reasonably expect any authority to assess any additional
Taxes for any period for which Tax returns have been filed. There is no dispute
or claim concerning any Tax liability of Industrialex either (i) claimed or
raised by any authority in writing, or (ii) as to which Industrialex has
knowledge. Industrialex has delivered to the Company correct and complete copies
of all federal and state income Tax returns of Industrialex, examination reports
and statements of deficiencies assessed against or agreed to by Industrialex for
all years beginning in or after 1992. Industrialex is not a party to any Tax
allocation or sharing agreement. Industrialex has not been a member of an
affiliated group filing federal income Tax Returns, and does not have any
liability for the Taxes of any person (other than Industrialex) under Treas.
Reg. Section 1.1502-6 or any similar provision of state, local or foreign law,
as a transferee or successor, by contract or otherwise. Industrialex has not
made, and is under no obligation to make, payments that are or, if made, would
be, "parachute payments" under Section 280G of the Code, and no such obligation
will arise as a result of this Agreement or other agreements entered into in
connection with this Agreement.
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4.16 PROPRIETARY RIGHTS. Except as set forth on Schedule 4.16 of
Industrialex Disclosure Schedule: (i) Industrialex has not interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
Proprietary Rights of third parties, (ii) Industrialex (and its employees with
responsibility for Proprietary Rights matters) has not received any written
charge, complaint, claims, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that
Industrialex must license or refrain from using any Proprietary Rights of any
third party), (iii) to the knowledge of Industrialex there is no basis for any
as-yet unasserted charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including any claim
that Industrialex must license or refrain from using any Proprietary Rights of
any third party), or (iv) to the knowledge of Industrialex no third party has
interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Proprietary Rights of Industrialex.
4.17 ROYALTIES. All royalties, license fees, and other fees relating
to Industrialex's use of Proprietary Rights have been or will be paid in full as
and when due. Except as set forth in Schedule 4.17 of the Industrialex
Disclosure Schedule, the method used by Industrialex to calculate all royalties,
license fees, and other fees relating to Industrialex's use of Proprietary
Rights is correct and accurate and in accordance with the terms of any
agreements Industrialex has with any third party relating to the use of such
party's Proprietary Rights.
4.18 LABOR RELATIONS. The employee relations of Industrialex are good
and there is no pending or threatened labor dispute or union organization
campaign. None of the employees of Industrialex are represented by any labor
union or organization. Industrialex is in compliance with all federal and state
laws respecting employment and employment practices, terms and conditions of
employment, and wages and hours, and has not engaged in any unfair labor
practices.
4.19 TRANSACTIONS WITH AFFILIATES. Except as set forth in Schedule
4.19 of the Industrialex Disclosure Schedule, Industrialex is not a party to any
contract, lease, agreement, or their commitment with any officer, director, or
stockholder of Industrialex, or any affiliate of any such person, and there are
no loans outstanding from Industrialex to, or Industrialex from, any such person
or any affiliate of any such person.
4.20 PERMITS; COMPLIANCE WITH LAWS. Except as set forth in Schedule
4.20 of Industrialex Disclosure Schedule, Industrialex holds all permits,
licenses, consents, and authorizations issued by any government or governmental
authority that are necessary for the conduct of its business. Industrialex has
not received any written notice of any violation of any law, ordinance,
regulation, or order applicable to Industrialex or the business conducted by it.
The conduct of the business of Industrialex, as presently conducted, complies
with all applicable laws, ordinances, regulations, and permits, and the Company
is not in violation of any order, judgment or decree of any court, governmental
authority or arbitration board or tribunal.
4.21 ERISA. Neither Industrialex nor any ERISA Affiliate of
Industrialex maintains or contributes to or is obligated to contribute to, and
has never maintained or contributed to or been obligated to contribute to, any
Employee Pension Plan.
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4.22 BROKERAGE. Except as set forth on Schedule 4.22 of the
Industrialex Disclosure Schedule, there are no claims for financial advisory or
investment bankers' fees, brokerage commissions, finders' fees, or similar
compensation in connection with the transactions contemplated by this Agreement
based on any arrangement or agreement made by or on behalf of Industrialex.
4.23 DISCLOSURE; KNOWLEDGE. No representation or warranty by
Industrialex in this Agreement and no statement contained in any document,
certificate, or other writing prepared by Industrialex or its representatives
and furnished by Industrialex to the Company pursuant to the provisions hereof,
affirmatively misstates a material fact or omits a material fact necessary to
make the statements contained herein or therein not misleading. Whenever a
representation or warranty is made to the knowledge of Industrialex, or similar
words, it shall mean that all executive officers of Industrialex, and all other
persons who have any responsibility for those operations of Industrialex that
are pertinent to the representation or warranty have been informed of the
representation and after consideration and review of pertinent records of
Industrialex available to them, have confirmed to Industrialex that they know of
no facts which would cause the representation to be untrue.
ARTICLE V
COVENANTS
5.1 FILINGS; OTHER ACTION. Subject to the terms and conditions herein
provided, the Company and Industrialex shall and shall cause any appropriate
other party to: (a) use all reasonable efforts to cooperate with one another in
(i) determining what filings, if any, are required to be made prior to the
Closing Date with, and which consents, approvals, permits, or authorizations are
required to be obtained prior to the Closing Date from governmental or
regulatory authorities of the United States, the several states and foreign
jurisdictions in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby and (ii) timely
making all such filings and timely seeking all such consents, approvals,
permits, or authorizations and (b) use all reasonable efforts to take, or cause
to be taken, all other action and do, or cause to be done, all other things
necessary, proper, or appropriate to consummate and make effective the
transactions contemplated by this Agreement.
5.2 FURTHER ACTION. Each party hereto shall, subject to the
fulfillment at or before the Closing Date of each of the conditions set forth
herein or the waiver thereof, directly or by or through its officers or
directors, perform such further acts and execute such documents whether before
or after the Closing Date as may be reasonably required to effect the
Acquisition. In addition, subject to the limitations set forth in this
Agreement, and unless specifically prohibited by applicable law, each party will
use its best efforts to cause all of the conditions to Closing set forth in this
Agreement that are within its control to be satisfied prior to the Closing Date
and will not take any action inconsistent with its obligations under this
Agreement or which could hinder or delay the consummation of the transactions
contemplated by this Agreement or that would cause any representation, warranty,
or covenant made by it in this Agreement or in any certificate, list, exhibit,
or other instrument furnished or to be furnished pursuant hereto, or in
connection with the transaction contemplated hereby, to be untrue in any
material respect as of the Effective Time.
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5.3 EXPENSES. Whether or not the Acquisition is consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses. All
costs and expenses incurred by the Company shall be paid by the Stockholders,
except that Industrialex shall reimburse the Company for the costs incurred by
the Company in obtaining and delivering the audited Company Financial
Statements, and the Company may pay or reimburse the Stockholders for legal
expenses incurred in connection with the Agreement up to a maximum total expense
of $7,000.
5.4 EMPLOYMENT AGREEMENTS. Concurrently with the execution of this
Agreement, Xxxx Xxxxxxxxx shall enter into an employment agreement in the form
attached hereto as EXHIBIT B to become immediately effective after the Effective
Time.
5.5 BANKING MATTERS. The Company shall take all such action to remove
the current authorized signatories from the Company's bank accounts and credit
lines and to substitute officers of Industrialex designated by Industrialex as
such authorized signatories as of the Effective Time.
5.6 OFFICERS AND DIRECTORS OF THE COMPANY. All directors and officers
of the Company shall submit this resignations, effective concurrently with the
Closing.
5.7 INVESTMENT REPRESENTATIONS; LOCKUP AGREEMENTS. Each of the
Stockholders acknowledges that the Special Warrants, and the shares of
Industrialex Common Stock that will be issuable upon exercise of the Special
Warrants, have not been registered or qualified under the Securities Act of 1933
or any state securities laws, and will be issued to the Stockholders pursuant to
an exemption from such registration or qualification for transactions not
involving a public offering. The Special Warrants and the Industrialex Common
Stock are therefore "restricted securities," as that term is defined in Rule 144
under the 1933 Act, and may not be sold or transferred except pursuant to an
effective registration statement under the 1933 Act and the applicable state
securities laws or pursuant to exemptions from such registration requirements.
In addition, each Stockholder agrees that, in the event that Industrialex
effects a public offering of the Industrialex Common Stock (presently
anticipated to be effected on the CanadianValue Exchange in six to nine months)
within one year of the Closing Date, each Stockholder agrees to enter into a
lock-up agreement covering 70% of the Special Warrants and the shares issuable
upon exercise of the Special Warrants pursuant to which such shares may not be
sold or transferred for a period of nine months after the effective date of the
initial public offering. Each Stockholder agrees, at the Closing, to deliver to
Industrialex an Investment Representation and Lock-Up Agreement substantially in
the form of EXHIBIT C, setting forth the aforesaid investment representations
and agreements. The restrictions on transfers set forth in this Section 5.7
shall not prohibit the transfer of the Special Warrants and the shares issuable
upon exercise of such Special Warrants by a Stockholder by gift to a donee that
agrees to hold the transferred shares subject to the same restrictions on
transfer as are applicable to the Stockholder/transferor of such securities.
5.8 LIQUIDITY OF INDUSTRIALEX COMMON STOCK. In the event that no
public offering of Industrialex Common Stock has been effected within one year
of the Closing, Industrialex agrees, at the request of a Stockholder within six
months thereafter, promptly to repurchase from such
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Stockholder all of the Special Warrants issued to the stockholder hereunder at a
price of $1.00 per Special Warrant. Payment for such repurchase shall be made
within 20 days after the Stockholder makes demand for such repurchase upon
delivery of the Special Warrants, duly endorsed to Industrialex. Industrialex
shall pledge the Seller shares acquired by Industrialex hereunder to the
Stockholders as security for the performance by Industrialex of its obligations
to the Stockholders under this Section 5.8.
5.9 RELEASE OF GUARANTYS. Industrialex shall use its best efforts to
obtain the release of any personal guaranty given by any Stockholder
guaranteeing payment by the Company of any loans to the Company that are
presently outstanding. If necessary to obtain such release, Industrialex will
guaranty or agree to pay any such loans to the Company.
ARTICLE VI
CONDITIONS
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE ACQUISITION.
The respective obligations of each party to effect the Acquisition shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) This Agreement and the transactions contemplated hereby shall
have been approved in the manner required by applicable law by the holders of
the issued and outstanding shares of capital stock of Company on or before March
31, 2000.
(b) None of the parties hereto shall be subject to any order or
injunction of a court of competent jurisdiction that prohibits the consummation
of the transactions contemplated by this Agreement. In the event any such order
or injunction shall have been issued, each party agrees to use its reasonable
efforts to have any such injunction lifted or order reversed.
(c) No action, suit, proceeding, or investigation to suspend the
offering of [the Special Warrants] in connection with the Acquisition shall have
been initiated and be continuing, and all necessary approvals under state
securities laws relating to the issuance of the [the Special Warrants] to be
issued to the Stockholders in connection with the Acquisition shall have been
received.
(d) All consents, authorizations, orders, and approvals of (or
filings or registrations with) any governmental commission, board, or other
regulatory body required in connection with the execution, delivery, and
performance of this Agreement shall have been obtained or made, except for
filings in connection with the Acquisition and any other documents required to
be filed after the Effective Time.
(e) No action, suit, or proceeding shall be pending or threatened
by or before any court or governmental body in which an unfavorable judgment,
order, or decree would prevent any of the transactions contemplated hereby or
cause any such transaction to be declared
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unlawful or rescinded or that could reasonably be expected to cause a Company
Material Adverse Effect or an Industrialex Material Adverse Effect.
(f) All documents and instruments to be delivered by the parties
in connection with the transactions contemplated hereby shall be in form and
substance reasonably satisfactory to the parties and their respective counsel,
and the parties shall have received such other documents and instruments as they
may reasonably request in connection therewith.
6.2 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE ACQUISITION.
In addition to the conditions set forth in Section 6.1 above, the obligation of
the Company to effect the Acquisition shall be subject to the fulfillment at or
prior to the Closing Date of the following conditions:
(a) Industrialex shall have performed in all respects its
agreements contained in this Agreement required to be performed on or prior to
the Closing Date, the representations and warranties of Industrialex contained
in this Agreement and in any document delivered in connection herewith shall be
true and correct as of the Closing Date, and Company shall have received a
certificate of the President or a Vice President of Industrialex, dated the
Closing Date, certifying to such effect; provided, however, that notwithstanding
anything herein to the contrary, this Section 6.2(a) shall be deemed to have
been satisfied even if such performance has not occurred or such representations
or warranties are not true and correct, unless the failure to perform or the
failure of any of the representations or warranties to be so true and correct
would have or would be reasonably likely to have a Industrialex Material Adverse
Effect.
(b) There shall have been delivered to the Company certificates,
dated within five days of the Closing Date, of the Secretary of State of the
State of Colorado, with respect to the incorporation and good standing of
Industrialex.
(c) All consents and approvals of any third parties required in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby shall have been obtained
and delivered to the Company.
(d) There shall have been delivered to the Company certificates,
dated the Closing Date, of the President or Vice President and Secretary,
respectively, of Industrialex (i) to the effect that the Articles of
Incorporation of Industrialex have not been amended since the date of the
Certificates referred to in Section 6.2(b) above, (ii) attaching a true and
complete copy of the Bylaws of Industrialex as in effect on the Closing Date,
and (iii) attaching a true and complete copy of the resolutions of the Board of
Directors of Industrialex approving the execution and delivery of this Agreement
and authorizing the consummation of the transactions contemplated hereby.
(e) Industrialex shall have delivered to the Company an opinion
of its counsel in the form attached hereto as EXHIBIT D.
(f) The Company shall have executed and delivered to Xxxx
Xxxxxxxxx the employment agreement in the form attached as EXHIBIT B.
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(g) Industrialex shall have obtained the release of any personal
guarantees of borrowings by the Company as provided for in Section 5.9.
6.3 CONDITIONS TO OBLIGATION OF INDUSTRIALEX TO EFFECT THE
ACQUISITION. In addition to the conditions set forth in Section 6.1 above, the
obligations of Industrialex to effect the Acquisition shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) The Company shall have performed in all respects its
agreements contained in this Agreement required to be performed on or prior to
the Closing Date, the representations and warranties of the Company contained in
this Agreement and in any document delivered in connection herewith shall be
true and correct as of the Closing Date as if made on the Closing Date, and
Industrialex shall have received a certificate of the President or a Vice
President of the Company, dated the Closing Date, certifying to such effect;
provided, however, that notwithstanding anything herein to the contrary, this
Section 6.3(a) shall be deemed to have been satisfied even if such performance
has not occurred or such representations or warranties are not true and correct,
unless the failure to perform or the failure of any of the representations or
warranties to be so true and correct would have or would be reasonably likely to
have a Company Material Adverse Effect.
(b) The status of any litigation of the Company as described in
Schedule 3.14 of the Company Disclosure Schedule and/or the terms of any
agreements relating to the compromise or dismissal of any action, suit or
proceeding described in Schedule 3.14 of the Company Disclosure Schedule
(subject to any restrictions on the disclosure of such terms) shall be
satisfactory to Industrialex.
(c) Other than with respect to a default identified in the
Company Disclosure Schedule as of the date of this Agreement, the Company shall
not be in default of any obligation, where said default cannot be cured by the
Closing Date, under any of the Material Contracts, unless any such defaults,
individually or in the aggregate, would not reasonably be expected to have a
Company Material Adverse Effect, and Industrialex shall have received a
certificate of the President or a Vice President of the Company, dated the
Closing Date, certifying to such effect.
(d) All consents and approvals of any third parties required in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby shall have been obtained
and delivered to Industrialex unless otherwise waived by Industrialex.
(e) Xxxx Xxxxxxxxx shall have executed and delivered to the
Company an employment agreement in the form attached as EXHIBIT B.
(f) There shall have been delivered to Industrialex a
certificate, dated within fifteen days of the Closing Date, of the Secretary of
State of the State of Colorado, with
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respect to the incorporation and good standing of the Company, together with a
certificate of the Secretary of State, listing all charter documents of the
Company on file in the office of the Secretary of State and copies of the
Articles of Incorporation of the Company and all amendments thereto, certified
as true and correct by the Secretary of State.
(g) There shall have been delivered to Industrialex a
certificate, dated the Closing Date, of the Secretary of the Company (i) to the
effect that the Company's Articles of Incorporation have not been amended since
the date of the Certificate referred to in Section 6.3(f) above and (ii)
attaching a true and complete copy of the Company's Bylaws as in effect on the
Closing Date.
(h) There shall have been no change in the financial condition or
results of operations of the Company from that reflected in the 1999 Company
Balance Sheet so as to result in a Company Material Adverse Effect.
(i) Each Stockholder shall have delivered to Industrialex an
Investment Representation and Lock-Up Agreement substantially in the form of
EXHIBIT C, as provided for in Section 5.9 hereof.
(j) Each of the key employees of the Company listed on Schedule
6.3(l) of Industrialex's disclosure schedule, shall have entered into a
Non-Disclosure and Non-Competition Agreement with Industrialex in a form
reasonably acceptable to Industrialex.
(k) The Stockholders shall have delivered to Industrialex an
opinion of their counsel in the form attached hereto as EXHIBIT E.
ARTICLE VII
INDEMNIFICATION
7.1 SURVIVAL OF REPRESENTATIONS. Notwithstanding any examination made
by or on behalf of Industrialex, the knowledge of Industrialex or any of the
respective officers, directors, stockholders, employees, or agents of
Industrialex, or the acceptance by any party of any certificate or opinion, the
representations, warranties, covenants, and agreements of the Stockholders set
forth in this Agreement, or in any writing delivered by the Stockholders in
connection with this Agreement, shall survive the consummation of the
transactions contemplated hereby and shall expire on the date that is the
earlier of 12 months after the Closing Date except that the representations and
warranties made in Section 3.15 regarding taxes and Section 3.25 regarding
Employee Benefits shall survive until the expiration of the applicable statutes
of limitations, and that the representations and warranties made in Section 3.22
regarding Environmental Matters shall survive for a period of three years
following the Closing Date. Notwithstanding anything contained herein to the
contrary, the representations and warranties made in Section 3.1, Section 3.2
and Section 3.3 shall survive indefinitely and claims relating thereto may be
brought at any time following the Closing Date. Notwithstanding any examination
made by or on behalf of the Stockholders, the knowledge of the Company or of any
of its officers, directors, stockholders, employees, or agents of the
Stockholders,
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or the acceptance by any party of any certificate or opinion, the
representations, warranties, covenants, and agreements of Industrialex set forth
in this Agreement, or in any writing delivered by Industrialex in connection
with this Agreement, shall survive the consummation of the transactions
contemplated hereby and shall expire on the date that is 12 months after the
Effective Date.
7.2 INDEMNITY.
(a) Subject to the terms and conditions of this Article, each
Stockholder, jointly and severally, shall indemnify and hold harmless
Industrialex and each officer, director, and affiliate of Industrialex,
including without limitation, the Company or any successor of Industrialex
(collectively, the "Industrialex Indemnified Parties") from and against all
demands, claims, causes of action, assessments, including any Federal or state
tax audits, losses, damages, liabilities and costs and expenses, including,
without limitation, reasonable attorneys' fees and any expenses incident to the
investigation or enforcement of this Article VII (collectively, "Losses"), that
the Industrialex Indemnified Parties may suffer, sustain or become subject to by
reason of or arising out of (i) any breach of any covenant or agreement of the
Company or the Stockholders contained in this Agreement, and (ii) any inaccuracy
in any representation or warranty of the Company or the Stockholders contained
in this Agreement and in any document, Disclosure Schedule, certificate or other
instrument or writing delivered by or on behalf of the Stockholders or the
Company pursuant to this Agreement or in connection herewith.
(b) Subject to the terms and conditions of this Article VII,
Industrialex shall indemnify and hold harmless the Stockholders (collectively,
the "Company Indemnified Parties") from and against all Losses, that the Company
Indemnified Parties may suffer, sustain or become subject to by reason of or
arising out of (i) any breach of any covenant or agreement of Industrialex
contained in this Agreement, and (ii) any inaccuracy in any representation or
warranty of Industrialex contained in this Agreement.
7.3 LIMITATIONS ON INDEMNIFICATION. The indemnification provided for
in Section 7.3 hereof shall be subject to the following limitations and
conditions:
(a) No Stockholder shall be liable for any Losses resulting from
any inaccuracy in any representation or warranty of the Company or the
Stockholders contained in this Agreement unless written notice of entitlement to
make a claim (whether or not any monetary Losses have actually been suffered)
with respect to such Losses is given by an Industrialex Indemnified Party on or
prior to the expiration of the survival of the particular representation or
warranty at issue, as set forth in Section 7.1 above.
(b) Industrialex shall not be liable for any Losses resulting
from any inaccuracy in any representation or warranty of Industrialex contained
in this Agreement unless written notice of entitlement to make a claim (whether
or not any monetary Losses have actually been suffered) with respect to such
Losses is given by a Company Indemnified Party on or prior to the expiration of
the survival of the particular representation or warranty at issue, as set forth
in Section 7.1 above.
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(c) In the event that a Stockholder is required to make any
payment under this Agreement, such Stockholder shall promptly pay to
Industrialex Indemnified Party the amount so determined. If there should be a
dispute as to the amount or manner of determination of any indemnity obligation
owed under this Agreement, the Stockholder shall nevertheless pay when due such
portion, if any, of the obligation as shall not be subject to dispute. The
difference, if any, between the amount of the obligation ultimately determined
as properly payable under this Agreement and the portion, if any, theretofore
paid shall bear interest as provided in Section 7.5(b).
(d) In the event that Industrialex is required to make any
payment under this Agreement, Industrialex shall promptly pay to the Company
Indemnified Party the amount so determined. If there should be a dispute as to
the amount or manner of determination of any indemnity obligation owed under
this Agreement, Industrialex shall nevertheless pay when due such portion, if
any, of the obligation as shall not be subject to dispute. The difference, if
any, between the amount of the obligation ultimately determined as properly
payable under this Agreement and the portion, if any, theretofore paid shall
bear interest as provided in Section 7.5(b).
(e) Notwithstanding any other provision of this Article VII, no
Indemnified Parties shall be obligated to indemnify an Indemnified Party under
Section 7.2 unless the aggregate amount of the loss incurred by the Indemnified
Party or Indemnified Parties exceeds the sum of $92,500 (the "Deductible") prior
to the expiration of the applicable representations as set forth in Section 7.1.
In addition, no Stockholder shall be obligated to indemnify Industrialex, and
Industrialex shall not be obligated to indemnify any Stockholder for losses in
excess of the amount of Consideration received by such Stockholder hereunder.
For purposes of this subsection 7.3(e), the [Special Warrants] received by the
Stockholders hereunder shall be deemed to have a value of $1.00 for each share
of Common Stock of Industrialex issuable upon exercise of such Special Warrant.
7.4 CONDITIONS OF INDEMNIFICATION OF THIRD PARTY CLAIMS. The
obligations and liabilities of the parties hereunder with respect to Losses
resulting from the assertion of liability by third parties ("Third Party
Claims") shall be subject to the following terms and conditions:
(a) In the event that any claim or demand for which the
Stockholders would be liable to an Industrialex Indemnified Party hereunder, or
for which Industrialex would be liable to a Company Indemnified Party
(Industrialex Indemnified Party or the Company Indemnified Party, as applicable
being referred to as the "Indemnified Party" and the indemnifying party in any
such event being referred to as the "Indemnifying Party"), is asserted against
or sought to be collected by a third party, the Indemnified Party shall promptly
notify the Indemnifying Party of such claim or demand, specifying to the extent
practicable the nature of such claim or demand and the amount or the estimated
amount thereof to the extent then feasible (which estimate shall not be
conclusive of the final amount of such claim or demand) (the "Claim Notice").
The Indemnifying Party shall have 30 days from its receipt of the Claim Notice
(the "Notice Period") to notify the Indemnified Party (i) whether or not the
Indemnifying Party disputes its liability to the Indemnified Party hereunder
with respect to such claim or demand, and (ii) if it does not dispute such
liability, whether or not it desires, at its sole cost and expense, to defend
the Indemnified Party against such claim or demand; provided, however, that the
Indemnified Party is hereby authorized prior to and during the Notice Period to
file any motion, answer or other pleading that it shall deem necessary or
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appropriate to protect its interests; provided further, that the Indemnified
Party shall use its reasonable efforts to provide the Indemnifying Party with
notice of any such filing and an opportunity to comment thereon. In the event
that the Indemnifying Party notifies the Indemnified Party within the Notice
Period that Indemnifying Party does not dispute such liability and desires to
defend against such claim or demand, then except as hereinafter provided, the
Indemnifying Party shall have the right to defend by appropriate proceedings,
which proceedings shall be promptly settled or prosecuted to a final conclusion
in such a manner as to avoid any risk of an Indemnified Party becoming subject
to liability for any other matter. If an Indemnified Party desires to
participate in, but not control, any such defense or settlement it may do so at
its sole cost and expense. If, in the reasonable opinion of an Indemnified
Party, any such claim or demand involves an issue or matter that could have an
adverse effect on the business, operations, assets, properties or prospects of
an Indemnified Party or an affiliate of an Indemnified Party, such Indemnified
Party shall have the right to control the defense or settlement of any such
claim or demand, and its reasonable costs and expenses thereof shall be included
as part of the indemnification obligations of the Indemnifying Party hereunder.
If the Indemnifying Party disputes its liability with respect to such claim or
demand or elects not to defend against such claim or demand, whether by not
giving timely notice as provided above or otherwise, then the amount of any such
claim or demand, or, if the same be contested by the Indemnifying Party or by an
Indemnified Party (but the Indemnified Party shall not have any obligation to
contest any such claim or demand), then that portion thereof as to which such
defense is unsuccessful, shall be presumptively deemed to be a liability of the
Indemnifying Party hereunder (subject, if the Indemnifying Party has timely
disputed liability, to a determination that the disputed liability is covered by
these indemnification provisions).
(b) In the event that an Indemnified Party should have a claim
against an Indemnifying Party hereunder that does not involve a claim or demand
being asserted against or sought to be collected from it by a third party, the
Indemnified Party shall promptly send a Claim Notice with respect to such claim
to the Indemnifying Party; provided, that the failure to so notify shall not
limit the Indemnified Party's right to indemnification under Section 7.2 unless
such failure materially adversely affects the ability of the Indemnifying Party
to defend such claim and then only to such extent. If the Indemnifying Party
does not notify the Indemnified Party within the Notice Period that it disputes
such claim, the amount of such claim shall be presumptively deemed a liability
of the Indemnifying Party hereunder.
(c) Nothing herein shall be deemed to prevent an Indemnified
Party from making a claim hereunder for potential or contingent claims or
demands provided the Claim Notice sets forth the specific basis for any such
potential or contingent claim or demand and the estimated amount thereof to the
extent then feasible and an Indemnified Party has reasonable grounds to believe
that such a claim or demand will be made.
7.5 ARBITRATION. Any dispute between an Indemnified Party and an
Indemnifying Party with respect to an Indemnified Party's right to seek
indemnification with respect to any Claim pursuant to the provisions of this
Article VII shall be resolved by binding arbitration in accordance with the
following provisions of this Section 7.5; provided, however, that either the
Indemnifying Party or an Indemnified Party may seek injunctive relief or other
equitable relief to preserve the status quo pending arbitration.
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(a) An Indemnifying Party or an Indemnified Party may submit any
dispute that is subject to arbitration under this Section 7.5 by giving written
notice to the other parties to such dispute. Within ten business days after
receipt of such notice by such other parties, the Indemnifying Party shall
appoint one arbitrator and an Indemnified Party shall appoint one arbitrator and
within ten business days thereafter the two arbitrators so appointed shall
select a third arbitrator. If the Indemnifying Party or an Indemnified Party
shall fail to make such appointment within such 10-day period, the other party
may request the American Arbitration Association to appoint the second
arbitrator. The American Arbitration Association may thereupon appoint the
second arbitrator. If the two appointed arbitrators shall fail to select a third
arbitrator within said 10-day period, the Indemnifying Party and an Indemnified
Party shall mutually select the third arbitrator. If such parties are unable to
agree upon such selection, then such party may, upon at least five Business
Days' prior written notice to the other party, request the American Arbitration
Association to appoint the third arbitrator. The American Arbitration
Association may thereupon appoint the third arbitrator. All arbitrators shall be
experienced in corporate and financial matters and shall be impartial and
unrelated, directly or indirectly, so far as employment of services is concerned
to any of the parties or any of their respective Affiliates. The arbitration
shall be conducted in a location to be agreed upon by the parties or, in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association, as then in effect, except as otherwise provided in this Section
7.5.
(b) The three arbitrators shall investigate the facts and shall
hold hearings at which the parties may conduct limited discovery, present
evidence and arguments, be represented by counsel and conduct cross examination.
The three arbitrators shall render a written decision on the matter presented to
them by majority vote as soon as practicable after the appointment of the third
arbitrator and in any event not more than 45 days after such appointment. The
decision of the arbitrators, which may include equitable relief, shall be final
and binding on the parties hereto, and judgment upon the decision may be entered
in any court having jurisdiction thereof. If the three arbitrators shall fail to
render a decision within said 45-day period, either party may institute such
action or proceeding in such court as shall be appropriate in the circumstances
and upon the institution of such action, the arbitration proceeding shall be
terminated and shall be of no further force and effect. The prevailing party
shall be awarded reasonable attorneys' fees, expert and nonexpert witness costs
and expenses, and other costs and expenses incurred in connection with the
arbitration, and the fees and costs of the arbitrators shall be borne by the
nonprevailing party unless, in either case, the arbitrators for good cause
determine otherwise. In resolving any dispute, the arbitrators shall apply the
provisions of this Agreement, without varying therefrom in any respect. The
arbitrators shall not have the power to add to, modify or change any of the
provisions of this Agreement.
7.6 INTEREST. If all or part of any indemnification obligation under
this Agreement is not paid when due, then the Indemnifying Party shall pay
interest to the Indemnified Party on the unpaid amount of the obligation for
each day from the date the amount became due until payment in full, payable on
demand, at a rate of 10% per annum.
7.7 TAX AUDITS AND CLAIMS. In the event of an audit of a Tax Return
of the Company with respect to which an Industrialex Indemnified Party might be
entitled to indemnification pursuant
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to this Article VII, Industrialex shall have the right to control any and all
such audits which may result in the assessment of additional Taxes against the
Company and any and all subsequent proceedings in connection therewith,
including appeals. The Stockholders shall cooperate fully in all matters
relating to any such audit or other Tax proceeding (including according access
to all records pertaining thereto), and will execute and file any and all
consents, powers of attorney, and other documents as shall be reasonably
necessary in connection therewith. If additional Taxes are payable by the
Company as a result of any such audit or other proceeding, subject to the
limitations set forth in Section 7.2, the Stockholders shall be jointly and
severally responsible for and shall promptly pay all Taxes, interest, and
penalties which become due as a result of any such audit.
ARTICLE VIII
TERMINATION
8.1 TERMINATION OF AGREEMENT. This Agreement may be terminated or
abandoned by written notice given at or prior to Closing in the manner
hereinafter provided:
(a) By mutual consent of Industrialex and the Stockholders;
(b) By the Stockholders if the Closing has not occurred on or
before [April 1, 2000], due to a failure of any of the conditions specified in
Sections 8.1 or 8.2;
(c) By the Stockholders if there has been a material default or
breach by Industrialex with respect to the performance of any of Industrialex's
material covenants and agreements contained herein, or with respect to the
correctness of or due compliance with any of Industrialex's material
representations and warranties contained herein;
(d) By Industrialex if the Closing has not occurred on or before
[April 1, 2000], due to a failure of any of the conditions specified in Sections
8.1 or 8.3;
(e) By Industrialex if there has been a material default or
breach by the Stockholders with respect to the performance of any material
covenants and agreements of the Stockholders contained herein, or with respect
to the correctness of or due compliance with any material representations and
warranties of the Stockholders contained herein.
For purposes of this Section 8.1, the action of Stockholders who own a majority
of the Seller Shares shall be deemed to be the action of the Stockholders.
Notwithstanding the foregoing, if Industrialex or the Stockholders are in breach
of any of the respective material obligations under this Agreement; Industrialex
or the Stockholders (as the case may be) shall not be entitled to exercise the
termination right under Paragraph 8.1(b), (c), (d) or (e) above during the
continuance of such breach.
8.2 PROCEDURE UPON TERMINATION. In the event of termination of this
Agreement by Industrialex or the Stockholders or by both Industrialex and the
Stockholders pursuant to Section 8.1 hereof, written notice thereof shall
forthwith be given to the other party or parties hereto and the
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transactions contemplated herein shall be abandoned without further action by
Industrialex or the Stockholders. In addition, if this Agreement is terminated
as provided herein:
(a) Each party will redeliver all documents, work papers and
other material of any other party relating to the transactions contemplated
hereby, whether obtained before or after the execution hereof, to the party
furnishing the same.
(b) All information of a confidential nature received by any
party hereto with respect to the business of any other party (other than
information which is a matter of public knowledge or which has heretofore been
or is hereafter published in any publication for public distribution or filed as
public information with any governmental authority) shall continue to be subject
to the provisions of Article VIII of this Agreement, which provisions shall
survive any such termination.
(c) Upon any termination of this Agreement pursuant to this
Article VIII, the respective obligations of the parties hereto under this
Agreement (other than under Paragraphs 8.2(a) and (b) above) shall terminate and
no party shall have any liability whatsoever to any other party hereto by reason
of such termination, irrespective of the cause of such termination, provided,
however, that (i) a termination of this Agreement by Industrialex pursuant to
Paragraph 8.1(d) due to a material default by the Stockholders, or by the
Stockholders pursuant to Paragraph 8.1(b) due to a material default by
Industrialex, shall not relieve the Stockholders or Industrialex (as the case
may be) of its liability hereunder to the non-defaulting party; and provided,
further, that if notwithstanding a material default by Industrialex or the
Stockholders, either Industrialex or the Stockholders close the transactions
contemplated hereby despite the material default by another party, such action
by the non-defaulting party or parties shall constitute a waiver of such
material default by another party; and (ii) notwithstanding anything to the
contrary contained herein, in no event shall the Stockholders be liable to
Industrialex by reason of a material breach of this Agreement by the
Stockholders, and in no event shall Industrialex be liable to the Stockholders
by reason of a material breach of this Agreement by Industrialex, for any
consequential damages, special damages or lost profits or lost business
opportunities arising from such breach.
ARTICLE IX
CONFIDENTIALITY
9.1 CONFIDENTIALITY COVENANTS. Industrialex and the Stockholders
acknowledge that Industrialex and the Company may have received access to
Confidential Information (as hereinafter defined) of the other in the course of
investigations and negotiations prior to Closing, and the Stockholders
acknowledge that they may have Confidential Information of the Company and/or of
Industrialex. Each party who receives any Confidential Information (a "Receiving
Party") from any other party hereto (the "Disclosing Party"), may disclose any
such Confidential Information to such party's employees, attorneys, accountants,
financial advisors or agents or representatives that have a need to know such
Information to facilitate or assist with the consummation of the transactions
contemplated hereby (collectively, "Representatives"). Subject to the foregoing
exception, and the
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exception hereinafter set forth in Subsection 8.2 below (i) a Receiving Party
shall keep, and shall cause its Representatives to keep, all Confidential
Information received from a Disclosing Party hereunder strictly confidential and
shall not disclose, and shall cause its Representatives not to disclose, any
such Confidential Information to any third party; and (ii) any Receiving Party
and its Representatives shall not make any uses of Confidential Information
received from a Disclosing Party except to facilitate or assist with the
consummation of the transactions contemplated hereby. Confidential information
shall include any business, financial, technical or other information,
including, but not limited to, business plans, forecasts, marketing plans or
initiatives, customer, client and vendor lists, training materials developed by
the Disclosing Party, information regarding the identities, qualifications and
compensation being paid to key employees, information received from customers,
vendors or clients with the expectation, whether explicit or implicit, that such
information would be protected from disclosure or dissemination to third
parties, and other information the value of which to the Disclosing Party is
dependent on the non-disclosure of such information. Confidential Information
shall not include information that, although disclosed or made available by a
Disclosing Party or any of its Representatives to a Receiving Party or any of
its Representatives, (i) can be obtained by persons not subject to
confidentiality or use restrictions from public sources, including periodicals,
government and industry publications and other media that is readily accessible
to the public or competitors of the Disclosing Party, (ii) has been disclosed by
the Disclosing Party or any of its Representatives to any unaffiliated third
parties without the imposition of any restrictions or prohibitions on disclosure
or use thereof and has been, as a result, disclosed by that third party to other
third parties, or (iii) information that the Receiving Party can demonstrate
convincingly was in its possession prior to its disclosure to the Receiving
Party by the Disclosing Party or any of its Representatives, provided that the
Receiving Party had not obtained possession of such Confidential information
from any one that the Receiving Party knew or should have known was subject to
restrictions on its right to disclose such information to the Receiving Party,
either pursuant to an agreement or by reason of his position or relationship
with the Disclosing Party.
9.2 DISCLOSURE PURSUANT TO LEGAL PROCESS. If a Receiving Party is
required by subpoena or other legal process, or by laws applicable to it, to
disclose or produce any Confidential Information belonging to a Disclosing
Party, then, the Receiving Party shall (i) provide the Disclosing Party prompt
notice thereof and copies, if possible, and, if not, a description, of the
Confidential Information requested or required to be produced so that Disclosing
Party may seek an order to quash such subpoena or other legal process or an
appropriate protective order or may elect to waive compliance with the
provisions of this Article IX as to any portion or all of such Confidential
Information (ii) consult with the Disclosing Party as to the advisability of
taking legally available steps to quash or narrow such request, and (iii)
provide such reasonable cooperation as the Disclosing Party may request in
connection with efforts by the Disclosing Party to quash the subpoena or other
legal process or to obtain a protective order with respect to the Confidential
Information being sought. If, in the absence of a protective order or the
receipt of a waiver hereunder, a Receiving Party is nonetheless, in the opinion
of his legal counsel, compelled to disclose or produce any such Confidential
Information of the Disclosing Party to any tribunal legally authorized to
request and entitled to receive such Confidential Information or to any
government agency with which the Receiving Party is required by law to file any
such Information or otherwise stand liable for contempt or suffer other censure
or penalty or liability, the Disclosing Party may disclose or produce such
Confidential Information to such tribunal or government agency, notwithstanding
the fact that such
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information may, as a result become available to the public, without incurring
liability hereunder to the Disclosing Party; provided, however, that the
Receiving Party shall give the Disclosing Party written notice of the
Confidential Information to be so disclosed or produced as far in advance of its
disclosure or production as is practicable and shall use its best efforts to
obtain, to the greatest extent practicable, an order or other reliable assurance
that confidential treatment will be accorded to such Confidential Information so
required to be disclosed or produced.
9.3 TERMINATION OF CONFIDENTIALITY OBLIGATIONS. The obligations of
Industrialex under this Article IX shall terminate on the Closing of the
transactions contemplated hereby, but the obligations of each Stockholder
hereunder, which shall be several and not joint, shall survive the Closing for a
period of five (5) years thereafter with respect to Confidential Information of
the Company or Industrialex. In the event of a termination of this Agreement,
the respective obligations of the Stockholders with respect to Confidential
Information of Industrialex and the obligations of Industrialex with respect to
Confidential Information of the Company shall survive for a period of five (5)
years from the date of such termination.
ARTICLE X
GENERAL PROVISIONS
10.1 NONDISCLOSURE OF THIS AGREEMENT. The Company agrees that it
shall, and it shall direct and use its best efforts to cause its officers,
directors, stockholders, employees, agents, and representatives to, keep the
existence of this Agreement and the terms of the transactions contemplated
hereby strictly confidential and to not disclose such matters to any third party
without Industrialex's prior written consent.
10.2 NOTICES. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission and by same day or
overnight courier service (with proof of service), hand delivery or certified or
registered mail (return receipt requested and first-class postage prepaid),
addressed as follows:
If to Industrialex: If to the Company:
Industrialex Manufacturing, Corp. Broomfield Industrial Painting, Inc.
00 Xxxxx Xxxxx Xxxxxxx 0000 X. 00xx Xxxxxx
Xxxxxxxx, XX 00000 Xxxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxxx Attn: Xxxx Xxxxxxxxx
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
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With copies to: With copies to:
Xxxxx, Xxxxxx & Xxxxxx LLP _________________________
000 00xx Xxxxxx, Xxxxx 0000 _________________________
Xxxxxx, Xxxxxxxx 00000 _________________________
Attn: Xxxxxx X. Xxxxxxxx, Esq. Attn: ___________________
Telephone: (000) 000-0000 Telephone: ______________
Facsimile: (000) 000-0000 Facsimile: ______________
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered, or delivered by courier or on the third
day after the mailing thereof.
10.3 ASSIGNMENT, BINDING EFFECT. Neither this Agreement nor any of the
rights, interests, or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto and other named beneficiaries of covenants or agreements in this
Agreement, or their respective heirs, successors, executors, administrators, and
assigns any rights, remedies, obligations, or liabilities under or by reason of
this Agreement.
10.4 ENTIRE AGREEMENT. This Agreement, the Exhibits, the Company
Disclosure Schedule, the Industrialex Disclosure Schedule, the confidentiality
agreements between the parties hereto and any schedules or agreements delivered
or to be delivered in connection with this Agreement constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings among the parties with respect
thereto. No information previously provided, or any addition to or modification
of any provision of this Agreement shall be binding upon any party hereto unless
made in writing and signed by all parties hereto.
10.5 AMENDMENT. This Agreement may be amended by the parties hereto,
by action taken by the Industrialex Board of Directors and by the Stockholders
by action by those Stockholders who own a majority of the Seller Shares by an
instrument in writing signed on behalf of each of the parties hereto.
10.6 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Colorado without regard to its rules
of conflict of laws.
10.7 COUNTERPARTS. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all of the parties
hereto. Executed counterparts transmitted by fax shall be effective as
originals.
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10.8 HEADINGS. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
10.9 INTERPRETATION. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa.
10.10 WAIVERS. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
10.11 INCORPORATION OF EXHIBITS. The Company Disclosure Schedule, the
Industrialex Disclosure Schedule and all Exhibits and schedules attached hereto
and referred to herein are hereby incorporated herein and made a part hereof for
all purposes as if fully set forth herein.
10.12 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction unless the same is
material to the terms of this Agreement, in the judgment of either party to this
Agreement, in which case the parties shall negotiate in good faith to revise the
same so as to be valid or enforceable. If any provision of this Agreement is so
broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable.
10.13 ENFORCEMENT OF AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any provision of this Agreement
was not performed in accordance with its specific terms or was otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof, this being in addition to any
other remedy to which they are entitled at law or in equity.
10.14 CONSENT. Whenever the consent or approval of a party is required
by the terms of this Agreement, unless otherwise provided, the same shall not be
unreasonably withheld or delayed.
* * * *
(THE REST OF THIS PAGE LEFT INTENTIONALLY BLANK.)
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IN WITNESS WHEREOF, the parties have executed this Agreement and
caused the same to be duly delivered on their behalf on the day and year first
written above.
"INDUSTRIALEX" "STOCKHOLDERS"
INDUSTRIALEX MANUFACTURING
CORP. By: /s/ Xxxxxx Xxxxx
-------------------------------
Name: Xxxxxx Xxxxx
By: /s/ Xxxxx Xxxxxx
-----------------------------
Name: Xxxxx Xxxxxx
-----------------------
Title: President & CEO By: /s/ Xxxxxx Xxxxx
---------------------- -------------------------------
Name: Xxxxxx Xxxxx
By: /s/ Xxxx Xxxxxxxxx
-------------------------------
Name: Xxxx Xxxxxxxxx
By:
-------------------------------
Name:
By:
-------------------------------
Name:
By:
-------------------------------
Name:
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